Landlords force pharmacy closures

RENTAL demands from some landlords are putting pharmacies out of business, Australian Pharmaceutical Industries’ (API) CEO, Richard Vincent, believes.

Addressing shareholders at the group’s annual general meeting on Wed, Vincent said API’s Priceline Pharmacy network had continued to grow in the year to 31 Aug 2019.

However, he raised concerns about rental issues impacting the sector.

“At the end of the financial year we had 488 stores in the network, a net increase of 13 stores, after [the] closure of seven company stores where landlords’ rental demands were a barrier to an acceptable return,” he said.

Despite the store closures, Vincent told investors that Priceline Pharmacy like-for-like sales had “continued their forward momentum, reversing the negative trend” of 2018, finishing the year 0.7% up on the prior corresponding period.

The Australian Securities Exchange (ASX) listed business recorded a net profit after tax of $56.6 million for the year, up 17.4%, with revenue from its pharmacy distribution business up 4.2% on 2018.

Vincent said “there is every indication” that the Federal Government will continue to support the Community Service Obligation (CSO) in the Seventh Community Pharmacy Agreement (7CPA).

He also welcomed AstraZeneca and Pfizer subsidiary, Upjohn’s descisions to return to the CSO system.

“I applaud their leadership,” he said.

“That all major suppliers have returned to the CSO system is indicative of its superior efficiency and their return will provide additional volume for API.”

API closed the financial year with a reported net debt of $199.1 million, up from $55.9 million in 2018, which Vincent attributed to the company’s stake in rival wholesaler, Sigma Healthcare, which was sold off in Dec (PD 17 Dec 2019).